New Research Shows CSIRO Misleading Australians On Energy Costs

Written by:
1 July 2024
New Research Shows CSIRO Misleading Australians On Energy Costs - Featured image

“Australia’s decision makers have deluded themselves for far too long that the CSIRO’s GenCost modelling is an accurate and reliable basis to design Australia’s energy future. It has meant we have been misled for too long on the true cost of the energy options on the table,” said Scott Hargreaves, Executive Director of the Institute of Public Affairs.

Today, the IPA released the groundbreaking research report by University of Queensland Adjunct Professor Stephen Wilson, The Ruinous Cost of Free Energy: Why a system built on renewables is the most expensive of all options, which exposes the true cost of Australia’s future energy system. The research finds:

  • The federal government’s current energy system plan and 2030 emissions targets will lead to a minimum of a four-fold increase in the average wholesale price of electricity.
  • The levelised cost of electricity methodology promoted by the CSIRO, and relied on by the federal government, is fundamentally flawed and misleading.
  • System wide decisions should only be made on a Total System Cost basis to ensure all costs are taken into account.
  • Total System Cost modelling demonstrates basing a system on variable renewable energy, solar and wind, will result in a cost at least twice as great as one built on coal or nuclear baseload generation, and is in fact the most expensive form of electricity service.

“Australia has previously benefited from some of the lowest consumer electricity prices in the industrialised world, but it now has some of the highest. Decades of poor decision making, based on flawed and misleading advice and ideology, is crushing the most productive sectors of our economy,” said Mr Hargreaves.

“You cannot accurately estimate the cost of electricity if all the costs associated with delivering it to consumers are not factored in. We must base future policies on Total System Cost to give Australians an accurate assessment of the price that needs to be paid to ensure energy security.”

The research shows when Total System Cost methodology is applied to different scenarios for the power system it becomes clear they equate to three distinct wholesale energy cost zones. These zones represent the annual average system-wide energy cost: (chart over page)

  • $50 per megawatt hour zone: represents total costs of inherited coal-based generation.
  • $100 per megawatt hour zone: represents total costs of generation led by the reliable 24/7 options of coal and/or nuclear.
  • $200 per megawatt hour zone: represents total costs of a generation system built around wind and solar.

“These cost zones represent just the wholesale electricity market, and we know that CSIRO and governments have also not fully accounted for the enormous infrastructure costs (poles and wires) required to transition Australia’s energy system to one built on renewables, as per the federal government’s targets. Adding those costs makes the conclusion even stronger,” said Mr Hargreaves.

“Total System Cost calculations make clear that an energy system led by variable renewable generation is by far the most expensive approach government could take.”

“The lowest cost power system is the baseload, coal-generation system Australia already has. The next lowest cost system would be one built on new baseload power plants, whether they be coal or nuclear. It is time Australians were given the facts.”

“Australia must recognise that national security is not achievable without energy security. Building an energy system which is affordable, provides sustainably priced and 24-7 baseload power is vital for Australia’s future. Our leaders must urgently commission analysis of the true costs of the alternatives, and cease reliance on the CSIRO’s discredited modelling,” said Mr Hargreaves

To download the IPA’s research click here.

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